Financial Statement Analysis
- This course is aiming to provide students the basic skills and techniques to analyze financial statements for the purpose of valuation. Students will learn how to evaluate financial statements and perform prospective and equity analyses. Students will acquire knowledge on how to recast and adjust financial statements to estimate of the intrinsic value of the firm.
- Have an idea about the place and the role of financial analysis in the system of management of the economic entity.
- Understand the essence of financial terms and to use them properly.
- Have basic practical skills in financial statement analysis and interpreting financial information.
- Demonstrate deep knowledge and critical understanding of theories, principles, concepts and methodologies in financial statement analysis.
- Apply a set of diagnostics to assess the quality of the accounting in financial statements.
- Evaluate the impact of financial reporting choices on the quality of accounting information including reported earnings.
- Use strong analytical skills and apply them to solve practical problems.
- Work effectively in a team environment.
- Topic 1. Overview of Financial Statement AnalysisTypes of Business Analysis. Components of Business Analysis. Financial Statements- Basis of Analysis. The Annual Report. Comparative Financial Statement Analysis. Ratio Analysis. Cash Flow Analysis. Specialized Analysis Tools.
- Topic 2. Financial Reporting and AnalysisFinancial Reporting Environment. Nature and Purpose of Financial Accounting. Concept of Income. Fair Value Accounting. Introduction to Accounting Analysis. Earnings Management.
- Topic 3. Analyzing Financing ActivitiesLiabilities. Leases. Postretirement benefits. Contingencies and Commitments. Off Balance Sheet Financing. Shareholders’ Equity. Liabilities at the “Edge” of Equity.
- Topic 4. Analyzing Investing ActivitiesCash and Cash Equivalents. Receivables. Prepaid Expenses. Inventories. Introduction to Long-Lived Assets. Plant Assets and Natural Resources. Intangible Assets.
- Topic 5. Analyzing Investing Activities: Intercorporate InvestmentsPassive investments. Investments with Significant Influence. Business Combinations. Derivative Securities.
- Topic 6. Analyzing Operating ActivitiesIncome Measurement. Non-recurring items. Revenue and Gain Recognition. Deferred Charges.
- Topic 7. Cash Flow AnalysisStatement of Cash Flows. Reporting Cash Flows from Operations. Analysis Implications of Cash Flows. Specialized Cash Flow Ratios.
- Topic 8. Return on Invested Capital and Profitability AnalysisImportance of Return on Invested Capital. Components of Return on Invested Capital. Analyzing Return on Net Operating Assets. Analyzing Return on Common Equity.
- Topic 9. Prospective AnalysisThe Projection Process. Short-term Forecasting.
- Topic 10. Credit AnalysisLiquidity and Working Capital. Operating Activity Analysis of Liquidity. Additional Liquidity Measures. What If Analysis. Importance of Capital Structure. Capital Structure Composition and Solvency. Earnings Coverage. Capital Structure Risk and Return.
- Topic 11. Equity Analysis and ValuationEarnings Persistence. Earnings Based Equity Valuation. Earning Power and Forecasting for Valuation.
- In-class activitiesIndividual or in small groups, in-class and oline in LMS, open book
- Midterm testIndividual, online in LMS, open book
- Team projectIn small groups, online in LMS, open book
- Final examThe exam will be synchronously proctored via the «Examus» proctoring system (https://hse.student.examus.net). Examination Procedure with the Use of the Examus Service ∙ Install the Yandex.Browser or the Google Chrome web browser (https://www.google.com/chrome/); ∙ Using the Yandex.Browser or Google Chrome web browser, go to the following page: ∙ https://hse.student.examus.net and click on blue button ‘Сессия НИУ ВШЭ’, log in and have your e-mail account verified; ∙ On the examination day, at the appointed time (or 10 minutes before it), go to https://hse.student.examus.net and click on the name of the test you wish to take; ∙ Take a photo of your identification document and send it to the Proctor for verification; ∙ You can now start the exam; ∙ Upon the completion of the exam click on ‘End the Exam’ button; ∙ Close the Examus tab. and click on, log in and have your e-mail account verified; It is necessary to login 15 minutes before the exam is due to begin. Every student can test the «Examus» system here: https://student.examus.net/?sessionId=24799&serverOrigin=https://stage.examus.net/. Some basic information on proctoring: https://spb.hse.ru/mirror/pubs/share/367863268.pdf. Student’s computer should meet the following requirements: https://spb.hse.ru/mirror/pubs/share/367863268.pdf). To participate in the exam, student is obliged to: upload a profile photo, turn camera and microphone on, confirm the identity. During the exam it is forbidden to: communicate (in social networks, with people in the room), use written notes (in a notebook or on printed sheets), open pages in the Internet, use a mobile phone or other electronic devices other than a calculator for calculations. It is also forbidden to make phone calls or receive calls and perform other forms of communication. During the exam it is allowed to use a calculator that only has this function. If the internet communication interruption is up to 5 minutes, it will be regarded as a brief connection break. If the internet communication interruption is 5 minutes or more, it will be regarded as a longer connection break and will entail the exam cessation. The retake procedure is identical to the exam procedure.
- Interim assessment (4 module)0.5 * Final exam + 0.15 * In-class activities + 0.15 * Midterm test + 0.2 * Team project
- Financial statement analysis, Subramanyam, K.R., 2014
- Fridson, M. S., Alvarez, F., & FinancePro. (2011). Financial Statement Analysis : A Practitioner’s Guide (Vol. 4th ed). Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=517757
- Fridson, M. S., & Alvarez, F. (2011). Financial Statement Analysis Workbook : A Practitioner’s Guide (Vol. 4th ed). Hoboken N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=382138